Correlation Between Data#3 and Sony Group

Can any of the company-specific risk be diversified away by investing in both Data#3 and Sony Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Data#3 and Sony Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Data3 Limited and Sony Group Corp, you can compare the effects of market volatilities on Data#3 and Sony Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Data#3 with a short position of Sony Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data#3 and Sony Group.

Diversification Opportunities for Data#3 and Sony Group

-0.08

Correlation Coefficient

Data#3  Sony Group

Good diversification

The 3 months correlation between Data#3 and Sony is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Data3 Limited and Sony Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group Corp and Data#3 is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Data3 Limited are associated (or correlated) with Sony Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group Corp has no effect on the direction of Data#3 i.e., Data#3 and Sony Group go up and down completely randomly.

Pair Corralation between Data#3 and Sony Group

Assuming the 90 days horizon Data3 Limited is expected to under-perform the Sony Group. In addition to that, Data#3 is 1.15 times more volatile than Sony Group Corp. It trades about -0.14 of its total potential returns per unit of risk. Sony Group Corp is currently generating about 0.47 per unit of volatility. If you would invest  1,756  in Sony Group Corp on September 15, 2024 and sell it today you would earn a total of  298.00  from holding Sony Group Corp or generate 16.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Data3 Limited  vs.  Sony Group Corp

Data3 Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Data3 Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Data#3 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Sony Group Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Group Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Sony Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Data#3 and Sony Group

The main advantage of trading using opposite Data#3 and Sony Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data#3 position performs unexpectedly, Sony Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sony Group will offset losses from the drop in Sony Group's long position.

The idea behind Data3 Limited and Sony Group Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.